Aging and
Globalization

Jason
L. Powell, Ph.D

University of Central Lancashire, UK

As we look
forward into the mid 21st century, demographers forecast dramatic increases in
cultural diversity in the general population of the globe, which will also be reflected
in increasing aging populations. Globalization is a complex
phenomenon which includes increased human interconnectedness facilitated by new
information technologies and huge volumes of trade,capital,
people, cultures flowing across national borders, and an evermore integrated
global economy.Globalization can be experienced as structural forces
impinging on our daily lives, as the creation of newspaces
and connectivity between locales and also as ideological resources (Burawoy et al, 2000).

While today's proportions of older people typically are highest in
more developed countries, the most rapid increases in older populations are
actually occurring in the less developed world (Krug 2002). Between 2006 and
2030, the increasing number of older people in less developed countries is
projected to escalate by 140% as compared to an increase of 51% in more
developed countries (Krug, 2002). A key feature of population aging is the
progressive aging of the older population itself. Over time, more older people
survive to even more advanced ages. The forecast rise in the number of older
people aged 75+ over the next 20 years will lead to an expansion of demand for
health, housing accommodation and pensions for aging populations and is thus of
crucial importance for governments, policy makers, planners, and researchers in
all nation states. On a global level, the 85-and-over population is projected
to increase 151% between 2005 and 2030, compared to a 104% increase for the
population age 65 and over and a 21% increase for the population under age 65 (Bengston and Lowenstein 2004). The most striking increase
will occur in Japan: by 2030, nearly 24% of all older Japanese are expected to
be at least 85 years old. As life expectancy increases and people aged 85 and
over increase in number, four-generation families may become more common.

In advanced capitalist or First World
countries, declines in fertility that began in the early 1900s have resulted in
current fertility levels below the population replacement rate of two live
births per woman. Perhaps the most surprising demographic development of the
past 20 years has been the pace of fertility decline in many less developed
countries (Giddens 1993). In 2006, for example, the
total fertility rate was at or below the replacement rate in 44 less developed
countries (Cook and Powell, 2007). Most of the more developed nations have had
decades to adjust to this change in age structure. For example, it took more
than a century for France's population age 65 and over to increase from 7% to
14% of the total population. In contrast, many less developed or Third World
countries are experiencing rapid increases in the number and percentage of
older people, often within a single generation. The same demographic aging
process that unfolded over more than a century in France will occur in two
decades in Brazil (OECD 2007). In response to this compression of aging,
institutions must adapt quickly to accommodate a new age structure. Some less
developed nations will be forced to confront issues, such as social support and
the allocation of resources across generations, without the accompanying
economic growth that characterized the experience of aging societies in the
West. In other words, some countries ‘may grow old before they grow rich’ (Cook
and Powell 2010).

Globalisation has also produced a
distinctive stage in the social history of populational
aging, with a growing tension between nation state-based solutions (and
anxieties) about growing old and those formulated by global institutions
(Powell 2005). Globalisation, defined here as the process whereby nation-states
are influenced (and sometimes undermined) by trans-national actors (Powell
2005), has become an influential force in shaping responses to population
aging. Growing old has, itself, become relocated within a trans-national
context, with international organisations (such as the World Bank and
International Monetary Fund) and cross-border migrations, creating new
conditions and environments for older people.

Ageing can no longer just be viewed as a
'national' problem but one that affects trans-national agencies and
communities. Local or national interpretations of ageing had some meaning in a
world where states were in control of their own destiny (Estes, Biggs and Phillipson, 2003). They also carried force where social
policies were being designed with the aim or aspiration of levelling
inequalities, and where citizenship was still largely a national affair (and
where there was some degree of confidence over what constituted 'national
borders'). The crisis affecting each of these areas, largely set in motion by
different aspects of globalisation, is now posing acute challenges for
understanding ‘global aging’ in the twenty-first century.

If these examples illustrate the complexity
and impact of global ageing – then it may be pertinent to highlight how
globalization is impacting more specifically across different continents across
the globe.

Since the turn of the
last century, the life expectancy of people born in North America has increased
by approximately 25 years and the proportion of persons 65 years or older has
increased from 4% to over 13% (Estes and Associates 2001). By the year 2030,
one in five individuals in the U.S. is expected to be 65 years or older and people
age 85 and older make up the fastest growing segment of the population. In
2000, there were 34 million people aged 65 or older in the United States that
represented 13% of the overall population (Estes and Associates 2001). By 2030
there will be 70 million over 65 in the United States, more than twice their
number in 2000. 31 million people, or 12 percent of the total population, are
aged 65 and older. In another 35 years, the elderly population should double
again. The aging population is not only growing rapidly, but it is also getting
older:

‘In 1990, fewer than one in ten elderly
persons was age 85 or older. By 2045, the oldest old will be one in five.
Increasing longevity and the steady movement of baby boomers into the oldest
age group will drive this trend’ (Longino, 1994: 856).

The percentage of oldest old will vary
considerably from country to country. In the United States , for example, the
oldest old accounted for 14% of all older people in 2005. By 2030, this
percentage is unlikely to change because the aging baby boom generation will
continue to enter the ranks of the 65-and-over population (Bengston
and Lowenstein 2004). This is obviously causing much concern among policymakers
but Longino (1994), for instance, believes that
thanks to better health, changing living arrangements and improved assistive
devices, the future may not be as negative as we think when we consider an
aging population.

It will be different, however, not least
because people currently divorced constitute a small proportion of older
populations. This will soon change in many countries as younger populations
with higher rates of divorce and separation, age. In the United States, for
example, 9% of the 65-and-over population is divorced or separated compared to
17% of people age 55 to 64 and 18 percent of people age 45 to 54 (Manton and Gu 2001). This trend has gender-specific implications: in
all probability nonmarried women are less likely than
nonmarried men to have accumulated assets and pension
wealth for use in older age, while older men are less likely to form and
maintain supportive social networks.

Shoring up public pensions is hardly the
only avenue nations in North and South America are exploring. In many
countries, privately managed savings accounts have been strongly advocated
(Estes and Associates 2001). Two decades ago, nearly every South American
nation had pay-as-you-go systems similar to the US Social Security system. Some
granted civil servants retiring in their 50s full salaries for life. Widening
budget deficits changed that. In 1981, Chile replaced its public system with
retirement accounts funded by worker contributions and managed by private
firms. The World Bank encouraged 11 other Latin nations to introduce similar
features. For example, in Chile the government addressed its fiscal budget
deficit by mobilizing a $49 billion of pension-fund assets that make it easier
for companies and corporations to fund investments in the local currency with
bond offerings, and most workers have some retirement benefits from this (OECD
2007). At the same time, the downside has been those people who cannot afford a
private pension have been left to a low state pension which has intensified
poverty (Estes and Associates 2001); an enduring feature of all nation states
in America. For the future, there is no safety guarantee that private pension
schemes are protected and pay out for people who invest their savings in such
provision. In a de-regulated US pension system, the issue of corporate crime
has highlighted the continuing problem of private pension provision. In one
example, this was seen clearly with the energy corporation of Enron’s
embezzlement of billions of dollars of employees private pension schemes
(Powell, 2005). This debate amounts to a significant global discourse about
pension provision and retirement ages, but one which has largely excluded
perspectives which might suggest an enlarged role for the state, and those
which might question the stability and cost effectiveness of private schemes.
The International Labour Organisation (ILO) concluded that investing in
financial markets is an uncertain and volatile business: that under present
pension plans people may save up to 30 per cent more than they need, which
would reduce their spending during their working life; or they may save 30 per
cent too little - which would severely cut their spending in retirement (Phillipson, 1998; Estes, Biggs and Phillipson,
2003).

Holtzman (1997), in a paper outlining a World Bank
perspective on pension reform, has argued for reducing state pay-as-you-go
(PAYG) schemes to a minimal role of basic pension provision. This position has
influenced both national governments and transnational
bodies, such as the International Labour Organisation (ILO), with the latter
now conceding to the World Bank's position with their advocacy of a mean-tested
first pension, the promotion of an extended role for individualized and
capitalized private pensions, and the call for Organisation for Economic Co-
operation and Development (OECD) member countries to raise the age of
retirement.

There is also the impact of
(Intergovernmental Organizations) IGOs on the
pensions debate in South America. The function of such arguments is to create a
climate of fear, of inevitability and scientific certainty that public pension
provision will fail. In so far as this strategy succeeds it creates a
self-fulfilling prophecy. If people believe the 'experts' who say publicly
sponsored PAYG systems cannot be sustained, they are more likely to act in ways
that mean they are unsustainable in practice. Certainly, in Europe and
elsewhere, the state pension is an extremely popular institution. To have it
removed or curtailed creates massive opposition. Only by demoralising the
population with the belief that it is demographically unsustainable has room
for the private financiers been created and a mass pensions market formed.

Increasingly, the social infrastructure of
welfare states is being targeted as a major area of opportunity for global
investors. The World Bank has expressed the belief that the public sector is
less efficient in managing new infrastructure activities and that the time has
come for private actors to provide what were once assumed to be public
services. This view has been strongly endorsed by a variety of multinational
companies, especially in their work with the World Trade Organisation (WTO).
The WTO enforces more than twenty separate international agreements, using
international trade tribunals that adjudicate disputes. Such agreements include
the General Agreement on Trade in Services (GATS), the first multilateral
legally enforceable agreement covering banking, insurance, financial services
and related areas (Estes, Biggs and Phillipson,
2003).

Asia has the fastest increase in the aging
population in the world. Kim and Lee (2007) claim the growing elderly
population is beginning to exert pressure on the East Asian countries
economies. Three decades ago, major industrialized countries have begun to
grapple with the similar problem. With increasing drop in fertility rates, more
East Asian economies such as Japan, Hong Kong, South Korea, Singapore and
Taiwan are expected to turn into “super-aging societies” by 2025 (Kim and Lee
2007). However, the magnitude of the future impact depends on the (in)ability
of individual economies to resolve the demographic changes problem through
increased privatisation, pension reforms, a migration on more productive
countries and extension of retirement age. Like western countries, Asia will
ultimately have to tackle issues related to pension reform and the provision of
long term health care services (Cook and Powell, 2007).

For Japan, the basic statistical reality of
its demographic profile is escalating. Already, 17 of every 100 of its people
are over 65, and this ratio will near 30 in 15 years. From 2005 to 2012,
Japan's workforce is projected to shrink by around 1% each year - a pace that
will accelerate after that. Economists fear that, besides blowing an even
bigger hole in Japan's underfunded pension system
(Cook and Powell, 2007), the decline of workers and young families will make it
harder for Japan to generate new wealth.

The future challenge of providing for
the elderly is especially urgent in the world's two biggest nations - India and
China. Only 11% of Indians have pensions, and they tend to be civil servants
and the affluent. With a young population and relatively big families, many of
the elderly population still count on their children for support. This is not
the case in China. By 2030, there will be only two working-age people to
support every retiree. Yet only 20% of workers have government- or
company-funded pensions or medical coverage (Cook and Powell, 2007). However,
as a counterbalance to such a gloomy perspective, ‘Chindia’
(China and India taken together) is currently accumulating vast wealth as a
result of globalization, wealth that could potentially be redirected for the
support of their elderly populations.

The population structure of Western
European countries has changed since the turn of the 20th century.
Whereas in 1901, just over 6% of the population were at or over current pension
age (65 in the UK for men and women), this figure rose steadily to reach 18% in
2001 (Powell, 2005). At the same time, the population of younger people
under age 16 fell from 35% to 20%. As European countries reach a relatively
high level of population aging, the proportion of workers tends to decline.
European countries, including France , Germany , Greece , Italy , Russia , and
the Ukraine, already have seen an absolute decline in the size of their
workforce. And in countries where tax increases are needed to pay for transfers
to growing older populations, the tax burden may discourage future workforce
participation. The impact on a Nation States gross domestic product will depend
on increases in labor productivity and that State’s
ability to substitute capital for labor. Less
developed countries can shift their economies from labor-intensive
to capital-intensive sectors as population aging advances. Options for more
European nation states may be more constrained. The ‘rolling back’ of pensions
promises is just one symptom of a shift in European history: the ‘graying of the baby-boom generation’ (Phillipson
1998). The percentage of 60-year-olds and older are growing 1.9% a year. This
is 60% faster than the overall global population. In 1950 there were 12 people
aged 15 to 64 to support each one of retirement age. Currently, the global
average is nine. It will be only four-to-one by 2050 (Powell, 2005). By then
numbers of older people will outnumber children for the first time. Some
economists fear this will lead to bankrupt pensions and lower living standards.
It is interesting that in Germany this fear is becoming a battleground for
political electioneering. For example, Germany has the highest population in
Europe and the third oldest population in the world, which presents both
critical questions on public finances to provide pensions and healthcare and an
opportunity for innovations in the marketplace. Currently, aging has started to
figure prominently in political discussions prior to 2009 elections, as
political parties vie for the elderly vote. The current Merkel administration
(2007-) has been criticized for increasing pensions while opponents talk about
a “war of generations” requiring young people to pay for taxation for elder
care.

The trend has drawn further attention
across Europe, where the working-age population will decline by 0.6% this in
2010. By 2025 the number of people aged 15 to 64 is projected to dwindle by 10.4%
in Spain, 10.7% in Germany and 14.8% in Italy. But aging is just as dramatic in
such emerging markets as China - which is expected to have 265 million
65-year-olds by 2020 - and Russia and Ukraine (Cook and Powell, 2007).

Using evidence from the UK, the
percentage of people of working age, that is 16-64, will drop from 64% in 1994
to 58% in 2031 (Powell, 2005). As the number of workers per pensioner decreases
there will be pressure on pension provision. This is evident now, in such
areas of pensions and long term care, the retreat of the state made evident in
the erosion of State Earnings Related Pay are forcing people to devise their
own strategies for economic survival in old age (Phillipson
1998). In the British context that also impinges on global societies in
general, private pensions are slowly being introduced in order to prevent the
‘burden’ of an aging population. These are ways in which the State continues to
rely on apocalyptic projections such as 'demographic time bomb' about aging
populations in order to justify cuts in public expenditure (Powell 2005).
Hence, the population of Great Britain, like that of other European countries,
is ageing rapidly. There are only enough young people to fill one in three of
the new and replacement jobs that will need to be taken up over the next
decade. Older people take much of the responsibility for our social and civic
life and for the care of children, the sick and the very old in the community.
Yet the gap between wealth and poverty, choice and the absence of choice for
older people is stark and growing wider (Phillipson
1998). The UK government is at the time of writing seeking to promote a debate
over what they envisage as a multi-billion pound deficit that will be found in
care for the elderly in future.

Economic security, health and
disability, and living conditions in old age are policy concerns throughout the
world, but the nature of the problem differs considerably from continent to
continent and between and within countries – especially within Africa.

In Africa older people
make up a relatively small fraction of the total population, and traditionally
their main source of support has been the household and family, supplemented in
many cases by other informal mechanisms, such as kinship networks and mutual
aid societies. In 2005, Nigeria ranked among the top 30 countries in the world
on the basis of the size of its population age 60 and over. Nigeria had the
largest older population in sub-Saharan Africa, with over 6 million people age
60 and over; South Africa had just over 3.4 million. Congo and South Africa are
projected to have nearly 5 million older people in 2030. Burkina Faso,
Cameroon, Cote d’Ivoire, Madagascar, Mozambique, Niger, Senegal, and Uganda are
all projected to have their older populations grow to over one million people
by 2030 (Building Blocks 2004). Very little careful empirical research has been
undertaken on long-term trends in the welfare of older people, but there are a
number of reasons to believe that traditional caring and social support
mechanisms in Africa are under increasing strain (OECD 2007).

Located on the least developed and poorest continent, African
economies are still heavily dependent on subsistence agriculture, and average
income per capita is now lower than it was at the end of the 1960s.
Consequently, the region contains a growing share of the world’s poor. In
addition, reductions in fertility and child mortality have meant that, despite
the huge impact of the HIV/AIDS epidemic across much of the region, both the
absolute size and the proportion of the population age 60 and over have grown
and will continue to grow over the next 30 years (Estes, Biggs and Phillipson 2003).

In Africa, as in other traditional societies
such as those in India or China, older people have traditionally been viewed in
a positive light, as repositories of information and wisdom. And while African
families are generally still intact, development and modernization are closely
connected with social and economic changes that can weaken traditional social
values and networks that provide care and support in later life. Africa has
long carried a high burden of disease, including from malaria and tuberculosis;
today it is home to more than 60% of all people living with HIV—some 25.8
million in 2005. The vast majority of those affected are still in their prime
wage-earning years, at an age when, normally, they would be expected to be the
main wage earners and principal sources of financial and material support for
older people and children in their families. Many older people have had to deal
with the loss of their own support while absorbing the additional
responsibilities of caring for their orphaned grandchildren. Increasingly,
then, it appears that African societies are being asked to cope with population
aging with neither a comprehensive formal social security system nor a
well-functioning traditional care system in place (Building Blocks 2004).

The big issue is that majority of the
world's population of older people (61 per cent, or 355 million) live in poorer
African countries. This proportion will increase to nearly 70 percent by 2025.
For many countries, however, population ageing has been accompanied by
reductions in per capita income and declining living standards. Epstein (2001)
notes that between 1950 and the late 1970s, life expectancy increased by least
10 per cent in every developing country in the world, or on average by about 15
years. However, at the beginning of the twenty- first century, life expectancy
remains below fifty in more than ten developing countries, and since 1970 has
actually fallen, or has barely risen in a number of African countries (Phillipson 1998). The AIDS epidemic is certainly a major
factor here, but development loans requiring the privatization of health care
have also had an impact. Epstein (2001) reports, for example, that by the mid-
1990s the African continent was transferring four times more in debt repayment
than it spent on health or education. More generally, Help Age International
(2000: 8) argue that:

‘Older people's poverty is still
not a core concern in the social, economic and ethical debates of our time.
Their right to development is routinely denied, with ageing seen as a minority
interest or case for special pleading. Poverty and social exclusion remain the
main stumbling blocks to the realisation of the human rights of older people
worldwide.’

The globalization of aging will have
dramatic effects on local, regional, and global economies. Most significantly,
financial expenditures, labor supply, and total
savings will be affected. Changes in the age structures of societies also
affect total levels of labor force participation in
society, because the likelihood that an individual will be in the labor force varies systematically by age. Concurrently,
global population aging is projected to lead to lower proportions of the
population in the labor force in highly
industrialized nations, threatening both productivity and the ability to
support an aging population.

Manton
KG and Gu X. (2001) Changes in the prevalence of
chronic disability in the United States black and nonblack
population above age 65 from 1982 to 1999. Proceedings of the National
Academy of Sciences 98;6354-6359.